International Trade Committee on Feb. 13th, 2023

[Sheri Meyerhoffer]

I think with respect to setting up this office, we're definitely leading. I think we have supply chain transparency legislation that's moving forward. We're on a par with that. We're starting to talk about human rights and environmental due diligence legislation in a private member's bill, so this discussion is there. Yes, we're definitely in the pack.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Now I'll go on to Ms. Guthrie with EDC.

You mentioned the role as a financial institution. As part of that, part of your office's role is to identify risk and ways to mitigate that risk and to review what is going on with the companies that you're supporting.

For example, do you work with CORE at all in terms of what they do? Ms. Meyerhoffer indicated in her second point that CORE supports “mandatory due diligence” legislation and identifying and putting in place remediation, so do some of the actions of CORE actually work together with EDC? You talk about ways to mitigate when you're working with some of the companies that you're supporting. Are you reviewing that? Are you pulling any funds? Have you had concerns with Canadian mining companies abroad such that you're saying you're going to end Canadian support?

[Rachel Guthrie]

Thank you for the question.

I actually have been with EDC for 18 months and I came from the financial sector. I will say that upon arriving here, I have been very impressed with the level of due diligence. I do believe that EDC's practices are far beyond those of many financial institutions. With regard to an understanding of human rights, on the executive level at the board, they understand leverage and remedy, and we've made many training activities happen across the organization.

In response to your question about our relationship with CORE, EDC would stand on our own due diligence practices, but we have met with CORE on a regular basis, helping them understand how we approach business transactions. There have been occasions when we would turn down a transaction. These numbers are actually reported in our integrated annual report, which is in the public domain.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you for that. Could you table that with the committee? I'd like to see those numbers, for example.

Don't you think we as a government and a country would benefit from greater coordination on that whole issue? We've talked about three separate government agencies that are looking at due diligence. Specifically, there are your operations and your agencies, and CORE is also doing that, and then it was told to one of my colleagues earlier that the trade commissioner office is doing their own due diligence as well. Could it not be a benefit that there would be closer coordination of these government departments?

[Rachel Guthrie]

As a question, with all due respect, EDC is a Crown corporation, and these are policy questions. I'd definitely refer you to Global Affairs Canada on the trade commissioner service.

[Tony Baldinelli, Conservative, Niagara Falls, ON]

Thank you.

[The Chair, Liberal, Judy Sgro]

We will move on to Madam Dhillon.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you, Madam Chair.

Thank you to our witnesses for being here this morning.

I will start with Ms. Guthrie.

How does the EDC ensure that its support of Canadian mining companies abroad aligns with sustainable development principles and protects the environment and local communities abroad at the same time?

Thank you.

[Rachel Guthrie]

That's an excellent question. Thank you so much.

As it pertains to our due diligence practices, I will pass to my colleague Sophie to respond.

[Sophie Roy]

Maybe I can provide a little more information on how we actually conduct our due diligence on these transactions.

As I said at the beginning, for the mining sector or for any other sector that we deal with at EDC, we look at the risk indicators and we prioritize the transactions that are of higher risk. We look at the country of operations, the industry and the track record of counterparties. Very importantly, we also look at the presence of vulnerable people who could be impacted on the ground. We're talking about indigenous people, women, children and other minority groups.

We also look at the customer's ability to avoid, prevent and mitigate the risks through their risk management systems. We assess the customer's stakeholder engagement and the grievance mechanisms that they have in place as well. Once we identify that there are still gaps in the way they are actually managing their risk according to international best standards, we will seek agreement on actions that need to be undertaken and then include some of these agreements into some of our own documentation. We then ensure that mechanisms are in place to be able to address or remedy that when those situations occur.

What's important for us to understand here is that the due diligence process that we put in place at EDC starts at the beginning of a relationship or at the start of a transaction, but it doesn't end at the signing; it's something that we actually continue during the relationship that we have with our customers, and when events or impacts occur, we go back and do some of the work and engage again with our customers abroad. We look at how they're addressing and remediating some of these impacts. That's how we actually conduct it and make sure that we are meeting the goals and international standards that we've adhered to.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you for your answer.

I'd like to follow up with a question regarding part of your testimony and your answer to my previous question.

If a company doesn't comply, what happens?

[Sophie Roy]

There would be different ways for us to be made aware of such a situation. We could learn about it through the notification of our own customer, EDC's annual review of certain products, adverse media coverage that we track on a nightly basis, or credible third party criticism that we will take very seriously, obviously.

When that happens, we connect again with our customers to gain a better understanding of the impact on the ground, what has actually happened, and what actions they are taking to address the situation.

We also sometimes have engaged directly with local communities that have been impacted to gain a better understanding of what the situation is like and ensure that the proper steps are being taken to address it. When that is not feasible, unfortunately, there are situations in which EDC will decide to exit a relationship or withdraw our support.

[Anju Dhillon, Liberal, Dorval—Lachine—LaSalle, QC]

Thank you, Ms. Roy.

I'd like to ask you about the process of applying for support through EDC. Are companies required to undertake any sort of environmental analysis?

[Sophie Roy]

As I said, we use a risk-based approach at EDC to review all the transactions that come in. When we identify particular risk indicators, such as when there are indications because of a country or because of a sector that there might be more severe impacts in the environment or to the human rights of the people on the ground, then we will undertake due diligence with the customers. We will then connect with them and have conversations or send them a list of questions that they need to answer. This is part of the process that is required for them to actually access support from EDC.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll move along to Mr. Brunelle-Duceppe for two and a half minutes, please.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Thank you very much, Madam Chair.

Ms. Meyerhoffer, you stated earlier that you were proud that the Office of the CORE is a world leader.

At the same time, you told me that you did not have enough power, that you had no results and that you had no access.

What exactly are you proud of?

[Sheri Meyerhoffer]

I think we are having some impact. I have 15 complaints at the moment with the CORE. The majority of those companies have engaged, and we are discussing issues. Hopefully, we'll be moving to a resolution and remediation. So far, the powers that I have are having a positive impact in a number of situations, although they're not having a positive impact in all situations.

The point is that it's not that we're not having any success but that we could have more success if we had the ability to compel documents.

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Thank you.

I'd like to remind you that the committee is studying Canadian mining companies. I think you have two complaints from Canadian mining companies, not 15, but that's not serious. I just wanted to note it.

I have one final question for EDC.

You said that you took the situation seriously and that you acted accordingly. The Subcommittee on International Human Rights of the Standing Committee on Foreign Affairs and International Development conducted essentially the same study in the spring of 2021.

If there was a serious effort on your part, I imagine that corrective action was taken following the committee's report.

What corrective action was taken by your organization following the subcommittee's study of Canadian mining companies, in which you took part?

[Rachel Guthrie]

Thank you. I'm very happy to address that question.

We know that the intersection of human rights and international business is an area of tremendous complexity and a lot of public—

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

Excuse me, Madam Chair.

It seems to be fixed now, but there was no interpretation.

Can I repeat the question and have the witness start over, please?

[The Chair, Liberal, Judy Sgro]

We can't start—

[Alexis Brunelle-Duceppe, Bloc, Lac-Saint-Jean, QC]

There was a problem with interpretation.

I can't help it.

[The Chair, Liberal, Judy Sgro]

We'll start with the answer, yes, but not with the question.

Could we have the answer, Ms. Guthrie?

[Rachel Guthrie]

The intersection of human rights and business is an area of tremendous challenge. Where we have fallen short, we believe in accepting responsibility and finding ways to do better.

We issued our board-approved human rights policy in 2019. Since then, we have introduced the principles of leverage and remedy. We have trained our workforce and our board on these principles. EDC has an ESG advisory council, a member of which is part of the working group on the UN's guiding principles on business and human rights.

[The Chair, Liberal, Judy Sgro]

Members of the committee, we have to switch over to the next panel.

I want to thank our witnesses today for their very valuable information.

I will suspend for a moment while we switch panels.